Business Unit 1.3 Flashcards
Give the keyword
“Targets expressed in money terms such as making a profit, earning income or building wealth”
Financial Objectives
What is meant by the term “S.M.A.R.T Targets”?
Specific, measurable, achievable, realistic and time bound
What is the definition shared by these key terms? Revenues Sales Revenue Turnover Sales turnover
The amount of income received from selling goods over a period of time.
What is the total revenue formula?
TR=P x Q
total revenue = price x quantity
Unscramble the keyword and give the definition!
Lases Moluve
Sales Volume
The number of items or products or services sold by a business over a period of time.
What are fixed costs? Give some examples
Costs which do not vary with the output produced such as rent, business rates, advertising costs, administration costs and salaries.
What is meant by the term “Total costs” and whats the formula for it?
All the costs of a business
TC = FC + VC
total cost = fixed cost + variable cost
Whats the keyword?
“Costs which change directly with the number of products made by a business such as the cost of buying raw materials”
Variable Costs
“TR-TC=P”
What is the keyword and definition?
Profit
Occurs when the revenues of a business are greater than its costs over a period of time.
Unscramble the key word and give a definition!
Hasc Wolf
Cash Flow
The flow of cash into and out of a business
What is the difference between inflow and outflow?
Inflow is the amount cash flowing into a business, outflow is the amount of cash that’s flowing out
What is the keyword?
“The receipts of a business minus its payment”
What is the formula for this?
Net Cash flow
Inflows - Outflows = Net Cash Flow
What is the term called when a business can no longer pay its debts?
Insolvency
What is Cash Flow Forecast?
A prediction of how much cash will flow through the a business in a period of time in the future
Unscramble the word and give a definition!
Nipnonige elabanc
Opening Balance
The amount of money in a business at the start of a month
What is “Closing Balance”
The amount of money in the business at the end of the month
What is meant by Trade Credit
Where a supplier gives a customer a period of time to pay a bill (or invoice) for goods or services once they have been delivered
What is the keyword?
“Materials that a business holds. Some could be materials waiting to be used in the production process and some could be finished stock waiting to be delivered to customers. “
Stocks
What is meant by long term finance?
Sources of money for businesses that are borrowed or invested typically for more than a year e.g Mortgage, Venture Capitalist
What is short term finance?
Sources of money for businesses that may have to be repaid with immediately or fairly quickly, such as an overdraft, usually within a year.
What can an owner use if he does not have any money left? Give the definition and the keyword
Personal Savings
Money that has been set aside and not been spent by family or individuals
What is a “Share Capital”
The monetary value of a company which belongs to its shareholders, for example, if five people each invest £10,000 into a business, the share will be £50,000
Give the keyword
“The owners of a company”
Shareholders
What is a venture capitalist?
An individual or company which buys shares in what they hope will be a fast growing company with a long term view of selling the shares at a profit.
What can you take out from a bank as a short term source of finance? Give the keyword and definition
Loan
Borrowing a sum of money which has to be repayed with interest over a period of time, e.g 1-5 years.
What is meant by security (or collateral)
Assets owned by a business which are used to guarantee repayments of a loan; if the business fails to pay off the loan, the lender can sell what has been offered as security.
What is meant by mortgage?
A loan where property is used as security
What is the keyword?
“A share of the profits of a company received by shareholders who own shares. “
Dividend
What is retained profit?
Profit which is kept back in the business and used to pay for investment in the business.
Give the keyword
“Renting equipment or premises”
Leasing
What is an overdraft facility?
Borrowing money from a bank by drawing more money than is actually in a current account. Interest is charged on the amount overdrawn.
Give the keyword
“A source of finance where a business is able to receive cash immediately for the invoices it has issued from a factor, such as a bank, instead of waiting the typical 30 days to be paid. “
Factoring
